I am a senior editor at Forbes, covering legal affairs, corporate finance, macroeconomics and the occasional sailing story. I was the Southwest Bureau manager for Forbes in Houston from 1999 to 2003, when I returned home to Connecticut for a Knight fellowship at Yale Law School. Before that I worked for Bloomberg Business News in Houston and the late, great Dallas Times Herald and Houston Post. While I am a Chartered Financial Analyst and have a year of law school under my belt, most of what I know about financial journalism, I learned in Texas.

Gunmaker Paid Up After Washington Sniper Killings, And May Yet Pay Again

Civil plaintiffs may find a way to sue Bushmaster, the manufacturer of the gun used in the deadly Newtown killings, even though a federal law signed by George W. Bush in 2005 theoretically prohibits lawsuits against gun makers over crimes committed with their products.

Bushmaster paid $2 million in 2005 to victims of another psychopathic killer, John Allen Muhammad, and his teenaged sidekick, Lee Boyd Malvo. The two terrorized the Washington, D.C. area in 2002, and victims and their families negotiated a $2.5 million settlement — paid entirely out of insurance — of claims Bushmaster and a Tacoma, Wash. dealer were negligent in selling the high-powered rifle to Mohammed.

Bushmaster admitted no fault and refused to comply with most of the reforms initially demanded by the Brady Campaign to End Gun Violence, which represented the victims. But the American legal system is adept at finding money for people who have suffered injuries or death caused by consumer products. Even though gun manufacturers have won double-barreled protection from Congress against the type of lawsuits that bedevil the makers of everything from toys to tractor-trailers, a lawyer for the Brady Center said gun manufacturers are hardly immune from suit.

“News of the death of litigation against the gun industry has been vastly premature,” said Jonathan Lowy, director of Brady’s Legal Action Project.

The Protection of Lawful Commerce in Arms Act was passed specifically to cut down on lawsuits against gun manufacturers over illegal acts committed by their customers. The law prohibits suits over “the harm solely caused by the criminal or unlawful misuse of firearm products or ammunition products by others when the product functioned as designed and intended.”

Congress also wrote unique protections for gun manufacturers into consumer-protection laws, Lowy said, exempting them from regulations that are designed to make products safer.

Firearms are “the only consumer product in America with no federal safety oversight,” he said, thanks to efforts led by Rep. John Dingell (D-Mich.). “A BB gun can be recalled, but if it’s a real gun with precisely the same defect, it cannot.”

Some types of lawsuits that would work against, say, a car manufacturer, are non-starters with guns. Ford Motor Co. might be forced to pay millions of dollars to crash victims even when the driver engaged in stupid or reckless behavior, under the theory that manufacturers are in the best position to possess information about such risks and redesign their products to reduce them.

But guns are designed to kill when used as intended, so there’s not much room for lawsuits against the manufacturer when guns do just that. And to make sure, Congress outlawed such suits, partly to deflect tobacco-style litigation by the states, which also involved an inherently deadly product. (Even if the economic theory behind that litigation was questionable.)

But Congress left open many loopholes in the 2005 act, as it is also wont to do, including lawsuits over negligent behavior by manufacturers and dealers that allows guns to get into the wrong hands. That can range from easily proven misdeeds, such as knowingly filing false paperwork about a sale, to the fuzzier act of aiding and abetting the sale of guns to felons and others who are prohibited from owning them.

That was the hook that kept Bushmaster in the lawsuit over the Washington killings, since John Lee Muhommad had a civil restraining order that prevented him from buying guns. The Tacoma, Wash. gun dealer had lost all the paperwork involving the sale to Muhommad — along with sales of 238 other guns — and Washington courts denied motions by Bushmaster and the store to dismiss.

In October, Lowy won an appeals-court decision in New York allowing Brady to continue a suit against Ohio gun maker Hi-Point Firearms and its distribution unit over allegations it was liable for supplying 181 inexpensive handguns to a gun-trafficking ring. One of the guns was later used to shoot Daniel Williams, then a high school basketball star.

Lowy said the “overwhelming percentage” of gun dealers never sell a weapon used in a crime, but a small number of them supply the criminal market with guns. Lawsuits targeting those dealers and the manufacturers who sell to them are a valuable tool for cleaning up the distribution system, he said.

“Even when lawsuits are not successful, the industry knows there’s a risk,” he said. “Even if they win this case they might lose the next case.”

The family of Brandon Maxfield won $24 million from Bryco Arms after the child was shot in the face by an allegedly defective pistol. That verdict was upheld in 2003 and drove Bryco into bankruptcy, arming both sides of the gun-control debate with arguments in favor of litigation and for the protection contained in the 2005 Lawful Commerce in Arms Act.

The Newtown shootings may not provide similar material for a lawsuit, since the mother of the shooter Adam Lanza reportedly obtained her guns legally. But even if civil litigants do win damages against Bushmaster again, or even push the company into bankruptcy like Bryco, that’s not necessarily a victory for gun control.

After Bryco failed, it was purchased by a former company foreman at a bargain price and renamed Jimenez Arms. It’s still selling the inexpensive handguns critics call Saturday Night Specials. If Cerberus Capital Management dumps its Freedom Group, which owns Bushmaster, for a bargain price, that will only make it easier for the new owner to supply the market with more cheap guns.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.